Leases

6 Months Ended

Jun. 30, 2021

NOTE 6 — LEASES

The Company leases the land underlying certain of its properties, real estate, and various equipment under operating and, to a lesser extent, finance lease arrangements. The master lease agreement with MGP is eliminated in consolidation and, accordingly is not included within the disclosures below; refer to Note 11 for further discussion of the master lease with MGP.

Bellagio real estate assets. The Bellagio lease has an initial term of 30 years that began on November 15, 2019, with two subsequent ten-year renewal periods, exercisable at the Company’s option. The initial term of the lease provides for a fixed 2% escalator to rent for the first ten years and, thereafter, an escalator equal to the greater of 2% and the CPI increase during the prior year, subject to a cap of 3% during the 11th through 20th years and 4% thereafter. As a result of the fixed 2% escalator that went into effect on December 1, 2020 in connection with the commencement of the second lease year, annual cash rent payments increased to $250 million. The Company was in compliance with its applicable lease covenants as of June 30, 2021.

Mandalay Bay and MGM Grand Las Vegas real estate assets. The Mandalay Bay and MGM Grand Las Vegas lease has an initial term of 30 years that began on February 14, 2020, with two subsequent ten-year renewal periods, exercisable at the Company’s option. The initial term of the lease provides for a fixed 2% escalator to rent for the first fifteen years and, thereafter, an escalator equal to the greater of 2% and the CPI increase during the prior year, subject to a cap of 3%. As a result of the fixed 2% escalator that went into effect on March 1, 2021 in connection with the commencement of the second lease year, annual cash rent payments increased to $298 million. The Company was in compliance with its applicable lease covenants as of June 30, 2021.

Other information. Components of lease costs and other information related to the Company’s leases was as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2021			2020			2021			2020
	(In thousands)
Operating lease cost, primarily classified within "General and administrative"⁽¹⁾	$	198,963		$	200,105		$	397,954		$	352,641

Finance lease costs
Interest expense⁽²⁾	$	(396	)	$	(12,854	)	$	(1,052	)	$	(13,806	)
Amortization expense		17,672			17,238			35,486			34,644
Total finance lease costs	$	17,276		$	4,384		$	34,434		$	20,838

(1)

Operating lease cost includes $83 million for each of the three months ended June 30, 2021 and 2020 and, $166 million for each of the six months ended June 30, 2021 and 2020 related to the Bellagio lease. Operating lease cost includes $99 million for each of the three months ended June 30, 2021 and 2020 and $197 million and $150 million for the six months ended June 30, 2021 and 2020, respectively, related to the Mandalay Bay and MGM Grand Las Vegas lease.

(2)	For the three and six months ended June 30, 2021 and 2020, interest expense includes the effect of COVID-19 related rent concessions received on certain finance leases, for which such effect was recognized as negative variable rent expense.

	June 30,		December 31,
	2021		2020
Supplemental balance sheet information	(In thousands)
Operating leases
Operating lease right-of-use assets, net⁽¹⁾	$	8,208,972	$	8,286,694
Operating lease liabilities - current, classified within "Other accrued liabilities"	$	31,402	$	31,843
Operating lease liabilities - long-term⁽²⁾		8,403,862		8,390,117
Total operating lease liabilities	$	8,435,264	$	8,421,960

Finance leases
Finance lease right-of-use assets, net classified within "Property and equipment, net"	$	165,487	$	200,980
Finance lease liabilities - current, classified within "Other accrued liabilities"	$	76,681	$	80,193
Finance lease liabilities - long-term, classified within "Other long-term obligations"		98,970		134,287
Total finance lease liabilities	$	175,651	$	214,480

Weighted-average remaining lease term (years)
Operating leases		29		30
Finance leases		2		3

Weighted-average discount rate (%)
Operating leases		8		8
Finance leases		3		3

(1)	As of June 30, 2021 and December 31, 2020, operating lease right-of-use assets, net included $3.6 billion and $3.7 billion related to the Bellagio lease, respectively, and $4.0 billion related to the Mandalay Bay and MGM Grand Las Vegas lease for each of the respective periods.

(2)	As of June 30, 2021 and December 31, 2020, operating lease liabilities – long-term included $3.8 billion related to the Bellagio lease for each of the respective periods, and $4.1 billion related to the Mandalay Bay and MGM Grand Las Vegas lease for each of the respective periods.

	Six Months Ended
	June 30,
		2021		2020
Cash paid for amounts included in the measurement of lease liabilities	(In thousands)
Operating cash outflows from operating leases	$	309,321	$	273,162
Operating cash outflows from finance leases		2,576		865
Financing cash outflows from finance leases⁽¹⁾		35,194		9,459

ROU assets obtained in exchange for new lease liabilities
Operating leases	$	1,651	$	4,121,810
Finance leases		—		167,089

(1)	Included within “Other” within the “Cash flows from financing activities” on the accompanying consolidated statements of cash flows.

Maturities of lease liabilities were as follows:

	Operating Leases			Finance Leases
Year ending December 31,	(In thousands)
2021 (excluding the six months ended June 30, 2021)	$	305,183		$	43,448
2022		619,521			72,523
2023		628,027			63,716
2024		638,031			1,032
2025		647,148			516
Thereafter		19,802,317			—
Total future minimum lease payments		22,640,227			181,235
Less: Amount of lease payments representing interest		(14,204,963	)		(5,584	)
Present value of future minimum lease payments		8,435,264			175,651
Less: Current portion		(31,402	)		(76,681	)
Long-term portion of lease liabilities	$	8,403,862		$	98,970